Dec 19, 2024 07:14 IST
First published: December 19, 2024 at 07:14 IST
India’s trade data continues to witness sharp fluctuations. In October, merchandise exports grew by a spectacular 17.2 percent. However, this momentum could not be sustained after that. According to the latest data from the Ministry of Commerce and Industry, exports contracted by about 5 percent in November. On the other hand, imports are on the rise, rising 27 percent in November. As a result, the trade deficit has reached 37.84 billion dollars, which is much higher than the average deficit registered in the first seven months (April-October) of this year. The decline indicates that the full-year current account deficit will be higher than previously expected.
Various statistics show that the decline in exports is mainly due to petroleum products. Excluding oil, exports rose 7.7 percent in November and 7.4 percent so far this year. Exports of electronic and engineering goods increased by 54 percent and 13.75 percent respectively in November. The increase in imports was due to a surprise increase in gold imports which reached $14.9 billion in November compared to $3.4 billion last year. Some analysts have linked the rapid increase in gold imports to the demand for festivals and weddings, while gold imports have increased by nearly 50 percent so far this year. A different trend has been observed in the import of other goods. For example, while crude oil imports rose in November, iron and steel imports fell sharply after hitting a 12-month low in October. Services data accompanying this data release indicate that services exports outpaced merchandise exports in November. However, this data is an estimate and will be revised once released by the RBI.
The outlook for global trade is plagued by uncertainty. The newly elected President of the United States, Donald Trump, has already stated his desire to increase taxes in Mexico, Canada and China. Trump has also criticized India’s tariffs, particularly pointing to 100 percent tariff rates on certain products. The President-elect said on Tuesday – “India charges too much. Brazil charges too much. If they want to charge us, that’s fine, but we’ll charge them the same thing.” This raises the possibility of Washington imposing reciprocal tariffs on Indian products. First Trump During the presidency, India lost duty-free access under the Generalized System of Preferences program which affected $5.7 billion worth of exports. Given the impact of Trump’s potential trade moves, India navigated this period of uncertainty skillfully while negotiating with the Trump administration should do
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